My 401(k)

Q. Should my husband and I stop contributing to a 401(k)?

A. No. You're watching the stock market go down, and suddenly it seems like a bad idea to be stuffing more of your family's retirement savings into it. Stop panicking, experts say. Contributions to a 401(k) are still tax-deferred, meaning that the more pretax dollars you squeeze into the account, the less you pay on April 15 next year. And for many people, retirement is still decades away, giving the market plenty of time to rebound. "There are always factors that negatively affect the stock market," says Constance Stone, a certified financial planner in Chagrin Falls, Ohio. "But research shows that people who stay invested during tough times come out far ahead of people who move their money." And don't be tempted to borrow from your 401(k). It may seem like a quick way to get cash, but if you lose your job, you'll need to pay that money back within 30 to 60 days — or risk incurring taxes and penalties on it.

My Credit Cards

Q. Should I stop using credit cards?

A. Not necessarily. Some advisers suggest hiding credit cards under the mattress during tough times, and, indeed, wielding a debit card has become a popular alternative. But using your debit card exclusively has disadvantages — fraud and error protections aren't the same — and credit cards can be part of a responsible spending plan. They can also help you establish a solid credit history. "Unfortunately, some people misuse credit cards by thinking, 'I'll do this now and get myself out of it later,'" Stone says. "But balances grow, and these people are in trouble before they know it." So treat your credit card as if it's a debit card, recording each transaction and subtracting it from your bank balance. Then pay your bill in full each month.

My Savings

Q. How much should I have in savings?

A. At least six months of living expenses. The general rule of thumb has always been that dual-income families should have three to six months of living expenses accessible in a savings account earning at least 2.5 percent. But fewer than 40 percent of adults have enough savings to tide them over for even three months, according to Bankrate.com. And now that the economy is so uncertain, experts are leaning toward six months. "If someone loses his job, it's anybody's guess how long it will take to become employed again," says Donald E. Whalen, a certified financial planner in Alpharetta, Georgia. But don't get overwhelmed by the thought of having to save so much money — "living expenses" doesn't mean cash for leisure activities. It's the money needed to cover bare essentials, like mortgage, food, and health insurance.

To beef up your emergency fund:

A. Set up a weekly automatic debit from your checking account into a high-interest savings account, and increase the amount when you can.

B. Raise the deductibles on your home and auto insurance, or shop around for a better deal, then stow the difference in a savings account.

C. When you finish paying off a credit card, keep making payments — to your emergency fund.

My Bills

Q. Is it okay to ignore my bills if I can't afford the payments?

A. No way. Ignoring your bills will result in late fees, negative credit, and higher interest rates — to the tune of as much as 32 percent on your credit cards, according to a study by advocacy group Consumer Action. Foresee a problem making a payment to your credit card or your mortgage company? Pick up the phone. "If you proactively call and explain the situation, you'll probably get better treatment," says Ken Robinson, a financial adviser in Cleveland. You may be able to work out a different payment plan or lower your interest rate. The same goes for taxes: File your return on time, then contact the IRS to talk about an installment plan, if need be.

Before I Lose My Job

It seems like the headlines are announcing new layoffs every day — more than half a million jobs were lost in December 2008 alone. Luckily, even in this shaky economic environment there are a few things you can do to prepare.

Apply for a home equity line of credit. If you're unemployed, you'll have a hard time persuading a bank that you can repay this loan, so now is a great time to secure a line of credit in case you need it. You pay interest only if you have to tap into it. The bad news: It's harder to get a HELOC than it used to be. Aim for a bank that will waive all application fees and charge an annual fee (once approved) instead. "I'd rather do that than pay $150 up front and then find out they're not going to give me the loan," says certified financial planner Constance Stone.

Get a physical. Encourage your husband to get one too, and take the kids to the pediatrician and dentist. You don't know what kind of health coverage you'll have in the future or how much it will cost, so get care while you're still on your employer's dime.

Downgrade your health coverage. When open enrollment comes around, try a less expensive health insurance plan for the upcoming year, if you can. That way, if you end up having to pay COBRA (your current health plan at full cost), you will pay less.

Adjust your withholding. Reduce federal and state withholding to get more cash in your paycheck — then don't spend it. Sock away the extra money in a high-interest savings account. If you remain employed, you can use the money to pay your taxes. But if you or your husband gets laid off, the money will be readily accessible so you can pay your bills.